Auditor General’s Report: a Mere Formality or an Effort to Maintain Accountability?

A brief look at Nepali peoples’ perception of the Office of the Auditor General and its annual reports.

The Office of the Auditor General (OAG) can and should play the role of watchdog to control irregularities in the government entities. The OAG should make its auditing system more effective so that it can reveal all malpractices in the government agencies. It’s reports should be available widely and understandable by a layman.

By Siromani Dhungana

The Office of the Auditor General in Nepal states is vision as the following:

“An Independent, efficient and effective audit institution to promote good governance.” Similarly, its mission is to “provide quality audit service to the nation for the efficient management of public resources.”

Efficient management of public resources, however, has always been in question. Effective implementation of the Auditor General’s report is a must for government accountability but that is not happening. The Auditor-General in Nepal is the auditor of more than four thousand public entities, including government departments, local authorities and their subsidiaries, security forces, licensing trusts, community boards and others. Recently, the OAG submitted its 50th annual report. The office claims that the report covers number of areas of audit concerns in the management of public funds.

The State of Public Sector Accountability

The overall accountability performance of the government entities is poor and disappointing in Nepal. This needs to be improved significantly to allow the public to hold public entities accountable for use of public money, and for the effectiveness of their service delivery.

Today, many Nepalis simply do not believe on the expenditure detail made public by the the government entities because they believe (and rightly so) corruption has been a part of the system and such system highly encourages expenses to be inflated.

AG’s Report: Nothing More than a Formality

The OAG released its 50th annual report in April but the report hasn’t attracted much interest from general public.

It’s contents are hardly reported. Even if some media report it the general public is not very eager to find more, says Kathmandu-based researcher Anirudra Neupane.

Low Awareness about Audit Report

Audit report is a public document. The government should ensure massive circulation of the audit report, Neupane says. But the OAG does nothing to make the report available to the wider mass. 

I think, the office should publish its report in simplified form. So far, it has been publishing a single report including all its observation within the same book. The office should start the new practice of publishing district-wise reports. If a person from Humla wants to know the public expenditure by the government entities in his/her district, the person should be able to read Humla-only report, they shouldn’t be burdened with the whole report.

Vouching & Verification

Our entire auditing system is mostly formal and inefficient. Generally, OAG carries out auditing based on vouchers received by the office from various government entities. Generally, vouching and verification are popular term in auditing process. Vouching is the process of recognizing obligation and authorizing cash disbursements. Auditors tallies vouchers in the auditing process.

Verification, however, is the most important step in the research process. After receiving vouchers, auditors are required to ensure that whether the facts stated in the vouchers are properly stated or not. Verification process involves reviewing, inspecting and checking of the vouchers to ensure that the documents conform to specific requirements. For instance, if any government entity says it spent Rs 1 billion in road construction then it is responsibility of the OAG to verify the quality of the road.

Reveal Individual Audit Report

According to the OAG, the audit observations and findings reported were based on audit examination of the financial statements and accounts of a total of 4,802 government bodies including constitutional Bodies, Supreme Court, Legislature-Parliament, Ministries, Nepal Army, Armed Police Force, Nepal Police, Government fully-owned Enterprises, District Development Committees, Board, Trust, and Universities.

The report has yet to include individual audit report, i.e., detailed expenditure by individual public entity and the amount of the arrears. Individual audit report will help general public to understand the performance of the government entity of their concern.

Arrear-focused Report

Currently, OAG is focused on arrears. Though the OAG claims that its report also covers the performance audit, it is yet to be effective and convincing.

“Report of the OAG is more focused on expenditure of public money by government entities but has given very nominal concern to the actual expenditure and its effectiveness,” Neupane said.

The main purpose of performance audit is to provide public accountability for the responsible use of public resources and regulatory powers, he adds.

Reform the System of Audit Plan

The primary duty of the Office of the Auditor General is to play the role of public watchdog in the realm of public finance effectively. More interaction with public during the audit process is a must to ensure effectiveness of the audit. Formality in the releasing of audit report cannot ensure the accountability in the government entities and transparency in expenditure.

(The writer can be contacted at )





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